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Introduction: Luis de Molina, S.J.: life, studies, and teaching.

Luis de Molina was born in Cuenca (Spain) in 1535 and died in Madrid on October 12, 1600. He entered the Society of Jesus at Alcala at the age of eighteen and was sent to Coimbra (Portugal) to finish his novitiate. He studied his philosophical and theological courses at Coimbra and was so successful in his studies that he was named professor of philosophy at this University in 1563, where he remained until 1567. By August of 1568, Molina had been transferred to Evora (Portugal) to teach theology. He expounded with great success Saint Thomas's Summa Theologica for twenty years, and in 1591 he retired to his native city of Cuenca to devote himself exclusively to writing and preparing for print the results of his long studies. Two years later, however, the Society of Jesus opened the Imperial College at Madrid and Molina was called to teach moral philosophy in the newly established institution. He died while still in Cuenca, before he had held his new chair in Madrid. Luis de Molina was no less eminent as a jurist than as a speculative philosopher and theologian. A proof is his work De iustitia et iure, which appeared complete only after his death.

In the sixteenth and early seventeenth centuries, a fairly small group of theologians and jurists centered in Spain attempted to synthesize the Roman legal texts with Aristotelian and Thomist moral philosophy. Molina and Lugo reorganized Roman law in its vast detail and presented it as a commentary on the Aristotelian and Thomistic virtue of justice in their treatise On Justice and Law (De iustitia et iure). The traditions of Roman law and Greek philosophy became intertwined more closely than they ever had been before or were to be again. (1)

Molina's chief contribution to the science of theology was his Concordia, on which he spent thirty years of the most assiduous labor. The full title of the now famous work is Concordia liberi arbitrii cum gratiae donis, divina praescientia, providentia, praedestinatione et reprobatione (Lisbon, 1588). As the title indicates, the work is primarily concerned with the difficult problem of reconciling God's praescientia and human free will. In view of its purpose and principal content, the work may also be regarded by the economist as a scientific vindication of the doctrine of the permanence of human free will under perfect information, and so could be interpreted, for instance, by authors such as Oskard Morgenstern, (2) J. Robinson, (3) and J. Hicks. (4) These references to the problem of predestination by such economists may be sufficient reason to think that Molina would have felt at home trying to solve problems posed in our day by the economist with the theoretical hypothesis of perfect information and human freedom.

Molina's varied interests amaze the modern reader, and Vansteenberge (5) remarks that the multitude of applications Molina makes of his principles is such that with the sole aid of his books a broad but accurate picture of the social and economic conditions of his time could be drawn. So, for example, in the Treatise on Money, Argument 408, (6) we find the following description of different kinds of businessmen.

Economic Context

Three main classes of businessmen developed in Europe in the sixteenth and seventeenth centuries: merchants, money changers, and bankers. The merchant kept in close touch with his counterpart and had his "factors" in every corner of the world. In Seville, the merchant was an imposing figure, having in his hands "the greatest trade of Christendom," and even in Barbary. To Flanders he sent wool, olive oil, and wines in exchange for cloth, carpets, and books, and to Florence cochineal and leather against gold brocade and silks. He imported linen from Flanders and Italy and had a hand in the lucrative salve trade of Cape Verde. So great were the mixed cargoes he sent to all parts of the Indies in exchange for gold, silver, pearls, cochineal, and leather that "not Seville nor twenty Sevilles" would suffice to insure them, and he had to call upon the resources of Lyons, Burgos, Lisbon, and Flanders for the purpose.

Close upon the merchant's paces followed the money changer, who traveled from fair to fair and from place to place with his table and boxes and books. (7) In theory the money changer was a public official whose business was to deal in cambium minutum or the changing of gold coins into silver or other money in return for a small fee. Money changers were to keep proper books "and not leave blank sheets between the pages already used," and only persons appointed by the cities or "villas" might act as brokers. The whole business of the fair was conducted through the money changers, and cash transactions were reduced to a minimum by the cancelling out of book entries. Tomas de Mercado complains that "the money changers sweep all the money into their own houses, and when a month later the merchants are short of cash they give them back their own money at an exorbitant rate." (8) In this and other ways the money changers made big profits, and it is for them that the severest verdicts of the theologians were reserved.

The proper banker was a much more dignified personage. The bankers served their depositors free of charge and used the money deposited to finance their own operations. The bankers, writes Tomas de Mercado,
 are in substance the treasures and depositaries of the merchants....
 In Spain a banker bestrides a whole world and embraces more than
 the Ocean, though sometimes he does not hold tight enough and all
 comes crashing to the ground. (9)

As early as 1526 the Venetian ambassador had observed that although goods were abundant at the fair of Medina del Campo the most important business was done in exchange transactions. All the evidence points to an accentuation of this tendency during the succeeding decades, and the fairs of Medina del Campo, Medina de Rioseco, and Villalon (10) lost the last traces of their old local character, and became great national, and indeed international, clearing centers. They were by this time "mainly places for settling accounts, not for true buying and selling," though of such there was still "a good share." (11)

Financial Innovation and Excesses

A contract can be defined as a mutual agreement generating an obligation from the consent of the parties. Several contracts in the sixteenth and seventeenth centuries were financial instruments. In Molina's Treatise on Money, Argument 398, we find a description of different kinds of economic contracts. A principal division of contracts into "named" and "unnamed" contracts is established. There are four kinds of "unnamed" or generic contracts: "I give that you may give"; "I give that you may do"; "I do that you may pay"; "I do that you may do." A named contract is one that has a special proper name by which it is distinguished from any other: purchase, sale, loan (mutuum), hire, association (partnership), accommodation (commodatum), pledge or mortgage, deposit, and so forth. Contracts are also divided into lucrative and onerous or burdensome. Contracts by which ownership is transferred may be listed: gift (donation), exchange (permutation), loan (mutuum), purchase (emptio), sale (venditio), monetary exchange (cambium), and so forth. The important thing to note is the variety of juridical figures as a form of reply to the different social and economic circumstances that originated with the arrival of precious metals.

A special juridical figure was dry exchange, a term loosely applied to any fictitious operation devised to evade the usury laws. We first meet it in Florence in the later Middle Ages, and it was, in fact, nothing but a loan camouflaged as an exchange deal. The borrower drew a bill of exchange in favor of the lender on some man of straw nominated by the latter, and this nominee protested the bill on its arrival. The borrower was then legally obliged to compensate the lender for the pretended loss sustained on both the exchange and the re-exchange. Dry exchange in this narrower sense was redefined and condemned by a Papal Bull of 1566 and again by a Spanish pragmatic of 1598, and was stigmatized as a "manifest cankered usury" also in England by Thomas Wilson in 1572.

The Question of Continuity and Change of Paradigm

When I first published The Theory of Just Price, by Luis de Molina, appealing to the philosophical methodology of Thomas Kuhn, I wrote that
 The Spanish doctors of the sixteenth century and, more concretely
 Luis de Molina, used in their moral reasoning an economic paradigm
 that, in so far as it was to be substituted by the classical
 paradigm, allows one to judge how much the just price does not
 coincide with the equilibrium price of classical theory. It does
 not seem possible to defend the identification of these prices
 without denying by doing so the existence of an authentic
 scientific revolution in the second half of the eighteenth century.
 It seems clear that the classical and scholastic disciplinary
 matrices could not harbor the same offspring. (12)

Two main philosophical reasons seem to endorse this thesis: First, there was a change in the philosophical and scientific notion of causality and, accordingly, second, a change in the anthropology and vision of the economic agent. The change in the anthropological vision of the economic agent has been mentioned before; namely, the scholastic economic agent is not the homo oeconomicus of the classical economists, it is closer to the "Keynesian apple." This change of the philosophical and scientific notion of causality and natural law A. Koyre describes as
 the destruction of the cosmos and the geometrization of space, that
 is, the substitution for the conception of the world as a finite
 well-ordered whole, in which the spatial structure embodied a
 hierarchy of perfection and value, that of an indefinite or even
 infinite universe no longer united by natural subordination, but
 unified only by the identity of its ultimate and basic components
 and laws; and the replacement of the Aristotelian conception of
 space--a differentiated set of inner worldly place--by that of
 Euclidean geometry--an essentially infinite and homogeneous
 extension from now considered as identical with the real space of
 the world. (13)

This change was introduced in the seventeenth century by the scientific revolution, but, of course, a change of mentality does not occur suddenly, it needs time for its accomplishment. The consequence of this change of "vision" (14) by the scientific revolution was
 the discarding by scientific thought of all considerations based
 upon value-concepts, such as perfection, harmony, meaning, and aim,
 and finally the utter devalorization of being, the divorce of the
 world of value and the world of facts. (15)

The classical economists followed the epistemology and anthropology of the scientific revolution and their interpretation of the natural law was different from the scholastic interpretation. The following points were crucial in this change of "paradigm": a new concept of causal relation substituted the scholastic causal relation, and a new vision of the person as economic agent substituted the old scholastic vision.

The Old Causality and the New Causality in Relation to a Free Market: From Moral Philosophy to Natural Science

It is J. Hicks who underlined the transition in the seventeenth century from the old causality to the new causality as a consequence of the scientific revolution in the seventeenth century. The old causality belongs to a
 System of thought ... in which causes are always thought of as
 actions by someone; there is always an agent, either a human agent
 or a supernatural agent, responsible for the action. It is
 fascinating to observe, in the literature of the seventeenth and
 eighteenth centuries, how this old causality broke down. (16)

The scholastic doctors developed a system of economic thought in which the subjects were active agents, responsible for their actions, therefore, they developed a system of economic thought based on the old causality. The difference between the scholastic agent and the economic agent in a free market has to do with the distinction between a "price maker" and a "price taker" agent, a distinction consequent upon the philosophical distinction between the old causality and the new causality. A "price maker" is responsible for the market price but a "price taker," to the contrary, is not responsible for the market price. In other words, a price that depends on the subject's behavior is not a price based on a necessary law, as it is a price based on the forces of supply and demand. With the philosophers of the Enlightenment, the new causality substituted the old causality and, according to Hicks, was "a permanent acquisition." (17)

Within the scholastic vision, the economic agents were considered "price makers" and, therefore, morally responsible. The transition to the new causality from the old causality, to the agent "price takers" from the agent "price maker," introduced a significant change in the vision and interpretation of "common estimate" as a criterion of justice, a change that we might label one of "scientific paradigm." Langholm describes such a change as a process of depersonalization of the idea of the market.
 Taking the common estimate as one criterion of justice, the medieval
 scholastics, early on, conceded that this estimate, insofar as it
 referred to the market, would vary to some extent with supply and
 demand. They would not, thereby, at first, permit economic actors to
 disclaim subjective, personal moral responsibility for their own use
 of economic power. This was something that happened gradually with
 the increasing objectivization (to use Gordon's term) or
 depersonalization of the idea of the market. More than anything
 else, it signals the breakdown of the medieval scholastic approach
 to economic ethics. (18)

What Langholm calls a process of increasing depersonalization is no different from what I have called a process of transition from a "price maker" to a "price taker," from the old causality to the new causality. By the second half of the eighteenth century this change had been accomplished and scientific reason became the norm to follow in human economic behavior. The necessary reason of science had substituted the recta ratio of the scholastics and, as a consequence, economics was understood as a natural science instead of a moral science. It will be necessary to wait until Keynes's General Theory for economics to be viewed as a moral science again. It was in this new "vision" of economics that the "Keynesian apple" substituted the utilitarian homo oeconomicus.

What had been to Smith a necessary process of adjustment to the scientific rationality based on the impersonal forces of supply and demand, to the scholastics had been a contingent and fallible process of adjustment to the moral norm of justice. The depersonalization of the idea of the market was contrary to the scholastic vision. The scholastic recta ratio is not a depersonalized mathematical reason: it is a probable human reason. It is true, as Langholm writes,
 Until a few decades ago, it was not uncommon in critical studies to
 encounter the suggestion that the medieval scholastics simply
 permitted the forces of the market to run their course and accepted
 the resultant "common estimate of the market" as the just price.
 [However] More recently, this liberalistic interpretation has been
 challenged by a younger generation of scholars, with whose
 arguments, as far as they go, I fully agree. (19)

The subject as a mean subject of an aggregate of individuals substituted and assumed the role of the scholastic singular individual. As a logical consequence, a change was produced in the interpretation of the natural law. (20)

Probabilism and the Knowledge of Natural Law in Scholastic Thought

The scholastic doctors traced their concept of natural law back to Aristotle and the Roman jurists, although they made of it something very different. Aristotle, for example, distinguished "natural justice" from "institutional justice," but this distinction developed in a wider sense with scholastic nominalism. There are two different epistemological approaches to natural law: one based on certainty and necessity, another based on uncertainty and probability. Luis de Molina, along with the rest of the Spanish doctors, holds a view of natural law and the decision-making process that can be described as probablistic. The reason was clear, as Luis de Molina writes,
 ... nature does not show us what belongs to natural law in such a
 way that, while deducing some conclusions starting from principles,
 especially when conclusions are such that they follow first
 principles in an indirect and unclear way, some error might not get
 into the conclusions. Therefore, in dealing with what belong to
 natural law, some error might result. (21)

According to the Spanish scholastics, uncertainty and imperfect information are two essential features of our knowledge of natural law. It was this recognition of the importance of uncertainty and imperfect information that led the scholastic doctors to probabilism and casuistry in moral philosophy. It was a logical answer to the difficult problem of the application of the general first principle to the singular case in a decision process. The first principle of moral life can be known with certainty, but we cannot know with certainty how conduct in a singular case is related to the first principle. In most branches of academic logic, such as the theory of the syllogism, all arguments aim at demonstrative certainty; they aim to be conclusive. In scholastic probabilism arguments are rational and claim some weight without pretending to be certain and conclusive. Scholastic recta ratio does not lead to truth but to opinion, and has nothing to recommend it but its subjective probability. As Martin de Azpilcueta, doctor Navarro, had written in his Manual de confesores in 1556,
 ... science is firm and clear knowledge; faith, not clear but dim;
 and opinion, neither firm nor clear knowledge; doubt, neither
 clear, nor firm, nor judicative; and scruples is nothing else but
 an argument against some of the above mentioned four. It follows,
 also, that the first four are opposite to each other and cannot
 occur in the same person. (22)

The scholastic recta ratio was not a scientific reason: it was a moral reason, and therefore, fallible and not necessary. Molina seems to be the more cautious and skeptical in his approach to knowledge of the natural law, both in trying to tease out what exactly it was, and in his grave doubts as to whether in fact it was so obvious and easy to understand. It is interesting to note that, in his Treatise on Probability, Keynes mentions the Jesuit doctrine of probabilism as "the first contact of theories of probability with modern ethics." (23)

I am not suggesting that scholastic probability is the same as Keynes's probability, or that Keynes's interpretation of scholastic probabilism is correct. But it does not seem accidental that the scholastic doctors and Keynes both agree about economics being a moral science based on fallible "opinions" about the cases considered, that both the scholastic doctors and Keynes used the philosophical distinction between the causa essendi and the causa cognoscendi when speaking of natural law, and that both accepted some kind of nominalism. If, as Peter F. Drucker writes, "Philosophically speaking, Keynes became an extreme nominalist," (24) Vereecke's opinion is that it seems impossible to analyze sixteenth-century moral economics without knowledge of nominalism. (25) Scholastic monetary theory cannot be understood without knowledge of nominalist philosophy, and something similar may be said of Keynes' monetary theory.

Nominalism and Scholastic Monetary Theory

If from an anthropological point of view scholastic probabilism and casuistry go back to the difficult problem of causality and human knowledge, its philosophical roots have to be seen in nominalist philosophy. In some areas, such as their political and moral philosophy, the late scholastics owed a large debt to Occamist philosophy and voluntarist anthropology, even when they tried to break free from them.

Nominalist philosophy stressed aspects of knowledge that were of great significance and reached far into the development of monetary thought. The nominalist claimed, for example, that only those propositions that could be reduced to the principle of contradiction would be considered absolutely "real," turning the causal propositions of science into merely probable propositions. They underlined the empirical dimension of moral and scientific knowledge; the logical coherence of abstract reasoning needed to be completed by withstanding the test of specific circumstances that defined the case under study. At the same time, the empirical knowledge of the case could not be understood without a general theory that had to be logically congruent. This is why the decision-making process was seen as a process born of a fallible subject who took a chance on a specifiable reasonable probability, which was neither truly necessary nor mathematically conclusive.

Among the nominalists, there was a certain kind of skepticism about the possibility of knowledge of an order in the world that human reason could discover. Nominalist philosophers claimed that abstract concepts were creations of mind rather than discoveries about the world. Hence, the relationship between abstract concepts, such as a unit of account (universals), and individual realities such as a standard commodity (singulars) was one of the controversial subjects between nominalists and realists. (26) According to nominalism, "there only exists the singular or individual" (quidquid existit singulare est seu individuum), universal concepts are only inventions of the mind. This principle is essential for a correct understanding of the scholastic monetary theory, for it applied to the unit of account in its double meaning, that is, as a pure number or abstract unit and as a standard or thing referred to as a unit of account.

In Molina's monetary theory, as with the scholastics in general, there is a significant distinction between the unit of account as an abstract concept and the singular thing, which is called the standard unit of measurement. When Molina writes: "A coin can be considered in two ways: one, as a coin; another, as a metal or as gold of greater or lesser purity, of greater or lesser weight," (27) the term coin is understood in a double sense: as an abstract concept and as the singular thing denoted by such a concept. The distinction between the name unit of account and the singular thing denoted by this name was interpreted by Molina and the Spanish doctors according to nominalist philosophy and, therefore, as what the philosophy of science today terms a "coordinative definition."

Scholastic Monetary Theory

A Scientific Problem: The Standard Unit of Account as a "Coordinative Definition" (28)

We can define only by means of other concepts what we mean by a unit of account or "numeraire," but this definition does not say anything about the real value of the singular unit that can only be established by reference to a real given good (gold, silver, or any other economic commodity). In Hicks's terminology, the "numeraire" or unit of account has to be "anchored" to a real commodity. (29) A unit of account is an abstract concept and an abstract mathematical number. For nominalism, mathematical notions were altogether connotative: number, extension, time, degree, are connotative concepts addressing relations between singulars rather than naming singular objects or absolute properties of them. Of course, such connotative notions are not without a fundamentum in re, but they should not be hypostatized. Money as unit of account or "numeraire" was just an ens rationis, and its fundamentum in re[alitate] was the standard good or commodity connoted by the concept, and to which the abstract concept is "anchored." The "coordinative definition" of the unit of account seems to be a simple legal operation of "anchorage," but the legal procedure is one thing and its economic and social meaning another.

A "coordinative definition" poses to the economist a serious epistemological problem: being a nominal concept, the relationship between the nominal unit and the real commodity has to be established by law, and it is here that the problem of metrical congruence begins. Two different questions were asked and answered by Molina and the Spanish doctors in the sixteenth and seventeenth centuries: Who must define the "coordinative definition?" What are the logical conditions of possibility for a neutral (sterile) definition of the standard money of account? The first one poses a sociopolitical problem; the second must be seen as an analytical problem, for it has to do with the scientific and analytical meaning of such a "coordinative definition."

A Political Problem: Who Must Define the Standard Unit of Account?

According to Luis de Molina and the Spanish doctors, it is the role of the public authority to determine the economic commodity and to coordinate the nominal unit of account. The public authority has the legal right to determine and declare the economic commodity to which the mathematical and abstract unit of account has to be "anchored," for it is the right of the state to define the metrical system of the nation. After the coinage has been minted, the standard units were supposed to be worth not only what their metal would bring in the market place, but also what the government that issued it declared it was worth. If chartalism is the doctrine that holds money is a creation of the state as Keynes writes, (30) the scholastic doctors were chartalists and not bullionists or metalists. (31) But Keynes conceded to the state a monetary function that the scholastic doctors never recognized. According to Keynes,
 ... if the same thing always answered to the same description, the
 distinction [between the abstract unit and the standard thing] would
 have no practical interest. But if the thing can change, whilst the
 description remains the same, then the distinction can be highly
 significant. The difference is like that between the king of England
 (whoever he may be) and King George.... It is for the State to
 declare when the times comes, who the king of England is. (32)

In the sixteenth and seventeenth centuries, to the contrary, it was all too evident that any standard of measurement had to be constant through time and space, and the economic standard of measurement was no exception. The scholastic doctrine was summarized by Tomas de Mercado in that way:
 It is universal and necessary for (money) to be any fixed
 measurement, that is sure and permanent. Everything else can, and
 even must change, but the measurement must be permanent, because as
 a fixed sign we can measure the changes of the other things. (33)

The difference between Keynes and the scholastics about the possibility of a change in the standard value of the unit of account leads us to the second problem mentioned before: the logical conditions of possibility of a neutral (sterile) definition of the money of account. We can refer to this as the "economic congruence" problem or the metric of economic value.

A Logical Problem: The Logic of a Definition of Monetary "Congruence"

As A. N. Whitehead wrote, we
 ... must understand at once that congruence is a controversial
 question. It is the theory of measurement in space and time. The
 question seems simple. In fact it is simple enough for a standard
 procedure to have been settled by act of parliament; and devotion
 to metaphysical subtleties is almost the only crime which has never
 been imputed to any English parliament. But the procedure is one
 thing and its meaning is another. (34)

One thing is the legal "coordinative definition" of the standard unit of account and another its use and meaning in a process of measurement in space and time. The process of measurement presupposes, first, that the quantity to measure is given, that it is an invariable quantity during the process of its measurement and, second, that the standard unit of measurement employed is a constant value. Neither of these two suppositions is unproblematic. Devotion to metaphysical subtleties may be a crime that has never been imputed to any English Parliament, but the scholastic doctors were charged with such a crime and especially in relation to the notion of equality and measurement in time and space. Let us see the logical meaning of congruence in its relation to measurement and equality.

Measurement is an operation by which we know how many standardized units has a determinant magnitude, length, weight, economic value, and so forth. A judgment of measurement is a metrical assertion and it is essentially a judgment of comparison; but a comparison is not necessarily a judgment of measurement. Measurement and comparison are different processes, although both are judgments of comparison. Russell provided the following explanation of the difference:
 A judgment of magnitude is essentially a judgment of comparison: in
 unmeasured quantity, comparison as to the mere more or less, but in
 measured magnitude, comparison as to the precise how many times. To
 speak of differences of magnitudes, therefore, in a sense where
 comparison cannot reveal them, is logically absurd. (35)

The metrical function of money is not a "comparison as to the mere more or less," it is a "comparison as to the precise how many times" and, therefore, presupposes a definition of the monetary unit as congruent to itself. It is of the essence of measurement that the standard unit of measurement remains unaltered, equal to itself; for "... it is a universal rule and necessary for (money) to be any fixed measure, that is, sure and permanent." (36) Equality is the term the scholastics used to define justice in economic exchanges and the classical economists to define economic equilibrium. It is important, therefore, to know how the logic of relations defines the relation of equality. In monetary theory this relation is fundamental to a definition of the metrical function of money.

The Logical Meaning of an Equality Relation

According to the logic of relations, a relation of equality E holds between any two successive values a and b if it holds also between values b and a, and if it is also a "symmetrical" relation. But suppose we compare values b and c, and their relation is a "symmetrical" relation, if we want to call it a "transitive" relation it must also hold between values c and a. A relation that is both transitive and symmetrical, it must also be reflexive if it has to be a relation of equality. Any value with the relation of equality E has to be equal in value to itself. In the logic of relations, a relation that is both symmetrical and transitive is call an equivalence relation, but equality is a special equivalence, it is a symmetrical, transitive, and reflexive relation of equivalence. Equality means equivalence but equivalence does not necessarily mean equality, and the difference is due to their relation to time. In relation to equality, time is not a causal factor what, indeed, it can be in relation to equivalence. Time cannot have a causal effect on a reflexive relation of equality because the passing of time cannot change a reflexive relation of equality, and this is the origin of the scientific and scholastic principle of the uniformity of nature.

A value equal to itself can be a standard measurement of value when applied successively to measure another value because the nature of its value is uniform; it is a homogeneous value. A uniform or homogeneous value means that it can move freely in time and space, and this is the reason why Russell considered the axiom of free mobility a necessary logical condition of measurement of a quantitative magnitude. Uniformity of nature and free mobility mean the same thing, and both depend on the concept of time and its relation to nature or economic value. Now, when Dempsey asks why the scholastic doctors were so vigorous in their exclusion of time as a determining factor for change in economic value, he answers:
 The reason seems to be, not the crudity of the Schoolman's concept
 of time, but the perfection of it. From the earliest days of
 Scholastic philosophy and theology, and even in positive theology,
 the problem of God's eternity and timelessness had forced attention
 on the problem of the nature of time. With such a refined concept
 in mind, and facing the problem of the exchange of values to an
 equality, they laid their emphasis on the fact that time in and by
 itself alters no values. With time may come changing circumstances,
 especially increasing risk [due to uncertainty], by which values
 are altered. These circumstances may found new titles or invalidate
 old ones. But the Schoolman consistently and characteristically
 insisted that this was the question of fact that required
 investigation and was to be probed in each case. An indeterminate
 appeal to the passage of time alone was of no avail. (37)

Free mobility depends on time because without a homogeneous time there is no free mobility, neither is there uniformity of nature. These two principles are fundamental to a scientific understanding of the concept of magnitude and causality in scholastic economics. (38) Differences between one event and another, between one value and another, do not depend on the mere difference of the times or places at which they occur, for time and space are homogeneous and, therefore, causally irrelevant or neutral. We will see later how this relation between causality and time can be applied to the economic concept of money as a productive economic factor (interest), but now it is necessary to return to the process of measurement, that is, to the metric of economic value.

Fungibility, Liquidity, and Quantification of Economic Value

The scholastic concept of fungibility is a homogeneous form of time, a form of externality, as Kant would say. A fungible good is a good whose unit of value can take the place (vices fungi) of any other unit; because vices fungi of any other unit, such unit of value is congruent or equal to itself in time and space and can be a standard unit of measurement. But fungibility, as with liquidity, can be perfect and imperfect, and a good whose unit of value cannot take the place of another unit is an imperfect fungible value. A unit of such a good or value is not necessarily equal to itself, for the passing of time or the change of place affects the quantity of such a value. An imperfect fungible value is also an imperfect liquid value, and fungibility and liquidity are qualities of economic value, they are not quantities of a homogeneous value. To pass from quality to quantity means to pass from imperfect to perfect information.

A quantitative magnitude supposes perfect information, but the scholastic economic subject did not have perfect information, and this imperfection makes him similar to the Keynesian economic subject. Fungibility, liquidity, and "reflexibility" are qualities referred to a temporal value, and only when a "coordinative definition" of such value is coined by the state, its degree of liquidity can be considered perfect liquidity or fungibility based on "perfect" information. But, as Molina observed,
 But if the circumstances were to change with time, and the value of
 the metal of such coins increased considerably, it should not be
 assumed that the legislators would want the laws which fixed the
 old rates to be still in force. And even if they wanted to, it
 would not be just nor fair.... (39)

The value of money "is not so rigid that it cannot rise and fall just as the goods do whose price is not fixed by law." This similar behavior of money and other economic goods introduces imperfect information on monetary values, and such imperfect information can be expressed in mathematical terms. Suppose the value of a standard unit of value, when coined by the state, is represented by an infinitesimal arc ds; after a period of time, in any other moment of time (t) its value would be ds.f(t), where the form of the function f(t) must be supposed as known. How are we to determine the moment t if our information is imperfect? For this purpose we require a coordinate of time and some measurement of duration from the origin of the coordinate, and here is where the axiom of free mobility must be introduced if fungibility is to be perfect.

A temporal distance from the origin only could be measured if we assume a law to measure it, but such a law must be implicit in our function f(t); therefore, until we assume f(t) we have no means of determining t and the value of the standard unit of value in time and space. If we accept the axiom of free mobility, the function f(t) would be zero, for the passing of time would be causally neutral to economic value. But there is no certainty about the function f(t) for, as Russell observes,
 ... experience can neither prove nor disprove the constancy of
 shapes [or value] throughout motion, since, if shapes [or value]
 were not constant, we should have to assume a law of their
 variation before measurement became possible, and therefore
 measurement could not itself reveal that variation to us. (40)

Ullastres referred to the divorce between the nominal unit of account and the "real" one as the "fundamental failure of the Old Nominalism," and Pierre Vilar observed how difficult it is to submit a money-commodity to the "coordinative definition" coined by the public authority. When the divorce occurs, we find ourselves before two economic metrical systems, two different "coordinative definitions" of the standard unit of measurement, one legal and another "real," and a choice has to be made. Molina's option was for a real commodity standard, but the important thing to remember is this: whatever the option might be, the economic subject must know that Molina's option has a moral, political, and a logical dimension. Molina's option is not the result of a mechanical decision, but of a responsible moral decision guided by fallible recta ratio. He provides the following example of such a moral decision.

In 1558, the ratio of gold and silver set by King Sebastian was disturbed by unexpected shipments from Ethiopia and, after narrating these facts, Molina opted for the real standard of measurement, subordinating the "constitutional" or "legal" metrical system to the one "empirically" established by the people.
 They tell me that the merchants from here in Castile brought a huge
 amount, and that they sold each coin of 1,000 reais for 33 silver
 reales, which taken to Portugal were worth 1,320 reais. That is why
 I warned King Sebastian that it would be convenient to increase the
 price of gold, and such is what I taught from my chair as
 professor. But it was useless.... (41)

Molina concludes his narration with the following statement:
 ... in these exchanges, more importance is given to the amount of
 silver comparing it to an equal amount of silver, or to the amount
 of gold comparing it to an equal amount of gold of the same purity
 than to the amount of copper and its price in different places.

According to the Spanish doctors, an economic assertion belongs to moral philosophy and not to natural science; and any moral assertion is epistemologically on par with opinion in Azpilcueta's previously mentioned schema, that is, "neither firm nor clear knowledge." (43) Therefore, an economic transition from certain to uncertain liquidity, from atemporal to temporal fungibility can only be considered a moral transition, that is, the result of a personal decision in time in a world of uncertain economic relations. This was one of the scholastic reasons to study carefully the notion of time and space, even if such a study could seem like a set of philosophical subtleties.

A Dynamic Definition of Monetary Congruence: Time and the Rate of Interest

A rate of interest expresses a relation between a present value and a future value, a relation between value at moment t and value at moment t1, two different or successive moments in time. If this relation is considered a continuous relation we could say that time and economic value are mathematically continuous. Let us fix attention on the purely mathematical problem. The relation between the new and the old value as a continuous relation in time can be named a rate of interest. Suppose that the old unit of account or measurement, as a result of its "coordinative definition" by the state, was in a moment t "anchored" to a real value ds, so that we may write ds = 1, this valuation of the standard unit must be considered just a convention. Now, if after a time the state changes the unit of account and its new value bears a definite relation of continuity with the old unit, this continuous relation to time of the standard unit could be written as ds.f(t). Suppose a coordinative system O1, where the axis t represents the variable time and the axis v represents different continuous values of the standard unit of measurement, the meaning of economic congruence in scholastic monetary theory could be explained in mathematical and geometrical terms as follows:


The standard unit of measurement ds = 1 is a congruent value in a moment of time t, the moment of its coinage or "anchorage." Suppose that in another moment [t.sub.1] its value has changed to s = [O.sub.1][O.sub.3], this new value must be a continuous function of time, therefore, it could be expressed as s = ds.f(t). It is the nature of this function f(t) and its "empirical" connotation that has to do with the logical problem of the dynamic congruence of money as the standard unit of measurement. In scholastic monetary theory it also has to do with the productivity (or sterility) of money and the notion of "extrinsic titles" to earn interest. About the nature of the function f(t) there are three possible choices:

1. f(t) might be the expression of a rate of zero interest, f(t) = 0, and then, ds = constant. Therefore, [O.sub.1][O.sub.3] = ds = s.

2. It might express a rate of interest distinct of zero, f(t) = 0, but such a rate could be, (2.a) a simple rate of interest and, therefore, a linear function of time; (2.b) a compound rate of interest and, therefore, an exponential function of time.

There are three possible elections of a monetary metric regime, but the question in any of these possible elections is: Who must decide the kind of relation or function f(t) between the present unit of measure and the future one? How does he know which one of these three possible functions will be the right one? The state has the right to define the standard unit in a moment of time, in the moment of its "conventional" definition and "anchorage." But this definition is a link between an abstract concept to a "real" value or economic good, and we are asking now for the relation between two "real" and successive values of the same economic good. How can the state know the "real" relation between the present and the future value of the standard unit of measurement? How does the state know if the function f(t) has a zero value or is distinct of zero, if it is a linear function or an exponential function? Can it be a question of free election of a definition or it is a question of empirical recognition of the actual relation between a present and a future value? In the moment of the "anchorage" of the standard unit it was a question of social "convention" and definition, but our question now is how long such "convention" and definition must last? Can it be changed from time to time, as Keynes said, or must it be maintained permanently as a moral and legal obligation?

Although the scholastics were not acquainted with the theory of relativity, they knew the meaning of a relative relation and its temporal dimension, and this knowledge was the origin and foundation of their doctrine of the lucrum cessans and damnum emergens. Before this doctrine is presented, let us finish with the problem of the election of the dynamic congruence of the standard unit, the election of the function ds.f(t). The problem will be set now in mathematical terms of first and second derivative of value in respect to time.

The Rate of Interest and the Axiom of Free Divisibility of a Continuous Time

According to the mathematical definition of interest, a simple rate of interest depends on the duration of the interval between t and t1, and such an interval is not divisible. On the contrary, a compound rate of interest does not depend on the duration of the interval and, therefore, such an interval is divisible ad infinitum. A simple rate of interest is a magnitude with a temporal dimension, depends on time and, therefore, the passing of time is an intrinsic cause of a change of value. Such a time is a discrete magnitude, it is not a continuous magnitude, and its relation to another interval must be considered an external relation between different and successive intervals of time. On the contrary, a compound rate of interest does not depend on the interval of time, it has no temporal dimension, and time is a continuous magnitude, but such continuity must be considered an internal relation between successive values in an infinite period of time. Therefore, a compound rate of interest connotes an intrinsic cause as the origin of such a rate of interest, while a simple rate of interest connotes an extrinsic cause as the possible origin of the interest produced. In relation to time, there is a distinction between internal causality and external causality, endogenous and exogenous causality, and the distinction between these two kinds of causal relation is the analytical origin of the scholastic distinction between "extrinsic titles" to interest and "intrinsic titles."

A simple interest is an imperfect liquid value, for its quantity depends on the passing of time; but this relation is unknown before an interval of time is bound. As a linear function of time, its characteristic depends on the relation between time and value, though once the characteristic is known the relation must be constant, and this constant relation means imperfect liquidity in any other temporal relation. Perfect liquidity is contrary to a causal relation of time and, therefore, to a simple rate of interest; perfect liquidity means causal independence with respect to time. A change on the liquidity degree can have an internal cause, that is, a change in the interval of time. A compound interest is a perfect liquid value, for its quantity does not depend on the passing of time, there is no causal relation between time and value. Therefore, any change of value must have a different origin from the passing of time--it has to have an external causality. This is the meaning of the scholastic phrase--"the mere passing of time does not produce interest."

The problem arises when the "coordinative definition" of the standard unit of measurement is employed in a measurement of the rate of interest. A standard unit of measurement must be independent of time but, at the same time, it must be a constant value; therefore, its dynamic cannot be the dynamic of either a simple interest or of a compound interest. Is there any other possible dynamic explanation? The dynamic of a "conventional" value, of a value defined by law and not by experience. This is the real meaning of a "coordinative definition" of the standard unit of value; it is a definition of perfect liquidity in as much as it is accepted and obeyed by the people. But the state can change the "coordinative definition," and this change means two different things: It is a quantitative change of the standard value but also a qualitative change of liquidity from perfect to imperfect liquidity, and it is important to note that a "coordinative definition" of perfect liquidity by the state is only a temporal definition. Keynes exposed clearly the "conventional" aspect of the definition of economic congruence when he wrote in his Treatise on Probability that
 We must ... distinguish between assertions of law and assertions of
 fact, or, in the terminology of Von Kries, between nomologic and
 ontologic knowledge. It may be convenient in dealing with some
 questions to frame this distinction with reference to the especial
 circumstances. But the distinction generally applicable is between
 propositions which contain no reference to particular moments of
 time, and existential propositions which cannot be stated without
 reference to specific points in the time series. The principle of
 the uniformity of nature amounts to the assertion that natural laws
 are all, in this sense, timeless. We may, therefore, divide our
 data into two portions k and l, such that k denotes our formal and
 nomologic evidence, consisting of propositions whose predication
 does not involve a particular time reference [numeraire], and l
 denotes the existential or ontologic propositions [standard unit of
 value]. (44)

If the state can change the assertion of law, the "coordinative definition," this change means a quantitative change of the standard value, but it also means a qualitative change of liquidity from perfect to imperfect liquidity, and these two dimensions are present and characterize the scholastic damnum emergens and lucrum cessans. A lucrum cessans means that a process of production stops, and this process can be a process of simple or compound interest. If it is a process of compound interest, a lucrum cessans must have an external cause, an ontologic dimension, and means that a qualitative change has been produced in the nature of the process. If it is a process of simple interest, the lucrum cessans can have an internal cause, a change in the interval of time and, therefore, a change of the assertion of law that is the "coordinative definition" of the standard unit of value. In any case, what the existence of lucrum cessans or damnum emergens means is that the principles of the uniformity of nature and free mobility in space and time are not "natural" principles but social "conventions," as it is a social "convention" the "coordinative definition" of the numeraire as a standard unit of measurement. And because free mobility in space and time is not a "natural" freedom, a congruent theory of economic value and exchange cannot be interpreted as an absolute and universal truth, but as a temporal and local theory about economic value grounded on a "conventional" definition of economic congruence.

To the Spanish doctors, the only congruent definition of any standard unit of measurement had to be an "absolute" definition, which means that it had to be founded on the axiom of the uniformity of nature, (45) and such uniformity is contrary to the lodging of a first and second derivative simultaneously in time. It is true that the axiom of the uniformity of nature, as the axiom of free mobility or any other axiom, is a nomologic proposition and not an "existential" proposition, for experience can neither prove nor disprove it. To use a scholastic distinction, it is true that the axiom of the uniformity of nature is the causa cognoscendi of economic values, though economic values are the causa essendi. But the peculiarities that define the merits of the scholastic treatises De iustitia et iure, to which Molina's De cambiis belongs, is the way in which the causa essendi and the causa cognoscendi are related to each other. The achievement of this relation was a function the scholastic doctors entrusted to recta ratio, and its development through the different cases (casus) reveals how "coordinative definitions" and empirical statements were interconnected in what today is called a constitutional monetary regime.

Constitutional Monetary Regimes and Personal Expectations

A monetary regime, writes A. Leijonhufvud,
 is, first, a system of expectations governing the behavior of the
 public. Second, it is a consistent pattern of behavior on the part
 of the monetary authorities such as will sustain these
 expectations. The short-run response to policy actions will depend
 on the expectations of the public, which is to say, on the regime
 that is generally believed to be in effect. (46)

A simple interest supposes a monetary regime in which freedom and discretion of the economic agents is constrained by the axiom of indivisibility of time, for the passing of time could produce a change of value. A compound interest is rooted in a monetary regime in which freedom and discretion of the economic agents are not constrained by the axiom of divisibility, for the passing of time and its free division does not produce a change of value. Scholastic monetary system was a constitutional regime congruent with the axiom of divisibility and, because it was congruent with this axiom the passing of time was considered causally neutral with respect to the production of economic value. The scholastic metric of value, therefore, may be called a Euclidean metric; nevertheless, the invariance of the standard unit of value was as a matter of definition, an assertion of law and not an assertion of fact, for there is no way of knowing whether a measuring standard actually retains its value when it moves from time to time or changes from place to place. The value of the standard unit had to be a fungible or homogeneous value in space and time, and the "coordinative definition" of the standard unit of measurement as a fungible and homogeneous value had to be a legal definition. All these philosophical considerations must be present when analyzing scholastic economic literature and, especially, the subject of economic contracts and the problem of usury.

The Contract of Mutuum, Usury, and the Axiom of Free Divisibility

A transaction of mutuum is defined as a translation of ownership of some fungible value: from the lender to the borrower and, after a certain time, from the borrower again to the lender. A loan of mutuum is a "delivery" of a fungible article (the qualities of which are fixed in number, weight, or measure) with the intent that it immediately becomes the property of the one receiving it with the obligation to restore after a certain time an article of like kind and quality. Your value becomes my value (tuum fit meum). How do we know if the article restored to the lender is of like kind and quality as the article received from him? How do we know if the number, weight, or measure of the good received is or is not equal to the number, weight, and measure of another good returned after a period of time? We must distinguish the "empirical" problem from the problem of juridical and moral obligation, for without solving the "empirical" problem there is no reason to inquire of the juridical and moral problem. But the "empirical" problem is related to the logical problem, that is, to the logical definition of congruence and its observance by the economic subjects. This is the moral problem.

A mutuum presupposes perfect fungibility or liquidity, and perfect fungibility does not change the economic value with the passing of time. But perfect fungibility is a matter of definition, as we have seen, and can be broken by a free economic agent. Therefore, the constraint to observe the definition of perfect fungibility must be a constitutional monetary constraint, for it is not a necessary physical constraint. A juridical constraint is a matter of obedience and morality and can be broken by a free economic agent but, in such a case, the nature of the legal contract should have been defined. It is a legal and moral function to determine in such cases what the actual contractual relation was between the economic agents.

The "constitutional" requirement to defend a fixed standard value in monetary transactions is a conditio sine qua non of perfect fungibility, and a mutuum is a dual transaction of perfect liquidity, from the lender to the borrower and, after an interval of time, from the borrower to the lender. The scholastic doctors were opposed in the sixteenth and seventeenth centuries to a debasement of currency because debasement was an operation contrary to a "constitutional" norm. Under a gold standard, for instance, the temporary suspension of convertibility means a temporary suspension of the "coordinative definition" of the standard, the suspension of its constitutional rule; debasement was a permanent change of the constitutional norm.

Debasement and Monetary Policy in the Sixteenth and Seventeenth Centuries

The standard value of the unit of account should not vary, but was it not evident in the sixteenth and seventeenth centuries that it varied? The experience of repeated new minting of coins had demonstrated that in difficult situations or emergencies like those that the Crown frequently experienced the public authority could change the "coordinative definition" of the standard unit of account. The question to answer is this: Should we put constraints on the exercise of discretion in monetary management? This is not the place to give an answer, but the answer given by Molina and other scholastic doctors was the following. A frequent manipulation of the currency meant an equal number of broken words, an equal number of changes in the correlation between the nominal unit of account and the real commodity chosen as the unit. The scholastic doctors reacted to these changes of the "coordinative definition" of the unit of account in the only way a moral philosopher could in the sixteenth and seventeenth centuries: condemning the public authority's failure to keep its word. Altering the value of the currency, just like altering the length of the meter or the weight of the kilogram, constituted a fraud that should be condemned. Debasement was robbery, and robbery was prohibited by moral and secular law. Mariana was explicit on this point. Asking if the king could lower the weight on a coin against the will of the people, if the king could go back on his word without the consent of society, Mariana writes:
 Two things are certain here: the first, that the king can change
 the form or the minting of money, as long as he does not make it
 worse ... the second, due to some difficulties like war or siege,
 he can lower its value on two conditions: one, that it be for a
 short period of time, or as long as the circumstances required;
 two, once the difficulty has abated, he must restore the losses
 suffered by the interested parties...; because if the prince is not
 a lord but the administrator of the goods of the citizens, he
 cannot take part of their patrimony by these means or by others, as
 occurs each time money is devalued, since more is charged for what
 is worth less. (47)

The reference to the need that arises from "war or siege" allows us to inquire about a third possible need: reactivation of the economy. The answer we read in Mariana's work may be surprising, formulated as it was two centuries before The Wealth of Nations.

Mariana clearly distinguished two time frames in which the manipulation of money by the authorities would produce its effects: the short and the long run. This manipulation "is like the drink given the sick person unduly, which first refreshes him, but later causes more serious accidents and makes the illness worse." (48) Mariana explains the "advantages" and "disadvantages" of enlarging the supply of money by minting "vellon" coins; he recognizes that money will not flow out of the kingdom and, therefore, there will be more money in circulation within the nation and the economy would be stimulated (1) by increasing domestic production, which will lead to an abundance of cheaper fruits and goods, and (2) debtors would find money cheaper. (49) In relation to foreign nations a decrease on imports will be produced, for greater domestic production would make them unnecessary and, what is more, they will be reduced to being paid with money of lower value. (50) Finally, the foreigners who still bring their goods to Spain would prefer to be paid in goods rather than in cash, which would stimulate once again domestic production. Mariana recognizes all of these short-term advantages, and that
 the king would benefit greatly from it, since he would fulfil his
 needs, pay his debts, remove the annuities consuming him, without
 hurting [directly] anybody. There is then no doubt that immediate
 interest is great. (51)

Nevertheless, Mariana's opinion is that these immediate benefits will turn into future impediments: farming would be abandoned; commerce with foreign countries would cease and, due to this shortage, the people and the kingdom would become impoverished and prices would go up. To avoid this general increase in price, Mariana adds,
 The king will want to fix a legal price on everything, and that
 would make the wound fester, because the people will not want to
 sell at low prices. (52)

The conflict between short-term and long-term interests is thus outlined, and the scholastic doctors will solve it by offering a compromise solution. As a general rule, they rejected the manipulation of the standard value by the public authority, for debasement was considered an "infamous systematic robbery," but the Spanish doctors also recognized that socioeconomic circumstances could evolve over time in such a way that the legal definition of the standard, its "coordinative definition," no longer corresponded to the first "anchoring" of the previous definition, thus making a change necessary. Hence, the role of the public authority with respect to the standard unit of account was twofold: first, to respect the "coordinative definition" given, avoiding any practice that would involve cheating or robbing society; second, to be aware of the evolution of circumstances in time. And when these circumstances warranted, modify the previous definition, adjusting the standard measure to economic reality.


If the Spanish doctors agreed with Smith and Ricardo as to the invariability of the standard of measurement, they also agreed with Keynes as to the need, according to circumstances, "to vary its declaration [of the standard] from time to time." This conclusion they learned from the experience of a persistent rise in prices, which in the first half of the sixteenth century had more than doubled. The theory developed by the Spanish doctors to explain this rise in prices is known today as the "quantity theory of money," (53) and Pierre Vilar speaks of the "Spanish quantitativists" as authors of a "well founded scholastic tradition." (54) Grice-Hutchinson, like Pierre Vilar and Wilhelm Weber, is also right in insisting that the Salamancan theologians discovered the "purchasing power" theory of exchange, (55) but the meaning of a "quantity" of value must be rightly understood if we want to know why the "constitutional monetary regime" of the scholastics was contrary to usury. To understand scholastic monetary theory, a serious study of the concept of time and its role in monetary phenomena is necessary.

(1) J. Gordley, The Philosophical Origins of Modern Contract Doctrine (Oxford: Clarendon Press, 1992), 91.

(2) O. Morgenstern, "Perfect Foresight and Economic Equilibrium," Economic Research Program, Research Memorandum no. 55 (Princeton, N.J.: Princeton University, 1963).

(3) J. Robinson, La segunda crisis del pensamiento economico (Mexico City: Ed. Actual, 1973), 66.

(4) J. Hicks, Causality in Economics (Oxford: Basil Blackwell, 1979), 11.

(5) E. Vansteenberge, "Molina," Dictionnaire de theologi catholique (1929), X, 2092 (part II).

(6) The references to Luis de Molina's Treatise on Money throughout this introduction are to the Spanish critical edition, Tratado sobre los cambios, ed. and intro. Francisco Gomez Camacho (Madrid: Instituto de Estudios Fiscales, 1990).

(7) Luis Saravia de la Calle, Instruccion de mercaderes muy provechosa (Medina del Compe: A. de Urvena, 1544), f. xciv (verso). A. W. Crosby, The Measure of Reality: Quantification and Western Society, 1250-1600 (Cambridge: Cambridge University Press, 1997).

(8) Tomas de Mercado, Summa de tratos y contratos de mercaderes (Sevilla: H. Diaz, 1571), 87.

(9) Mercado, Summa, IV.3-4.

(10) Molina, Treatise on Money, arg. 409.

(11) Mercado, Summa, IV, 88-89.

(12) Luis de Molina, La teoria del justo precio, ed. and intro. Francisco Gomez Camacho (Madrid: Editora Nacional, 1981), 98.

(13) A. Koyre, From the Closed World to the Infinite Universe (Baltimore and London: John Hopkins University Press, 1957), viii. Cf. A. Funkenstein, Theology and the Scientific Imagination from the Middle Ages to the Seventeenth Century (Princeton: Princeton University Press, 1986), II.B.

(14) Cf. Joseph Schumpeter's notion of "vision" in History of Economic Analysis (Oxford: Oxford University Press, 1967), Part I, chap. 4, sec. 1d.

(15) Koyre, From the Closed World, 2.

(16) Hicks, Causality in Economics, 6-8.

(17) Hicks, Causality in Economics, 8. "Causation can only be asserted in terms of the new causality if we have some theory, or generalization, into which observed events can be fitted; to suppose that we have theories into which all events can be fitted, is to make a large claim indeed. It was nevertheless a claim that thinkers of the eighteenth century, dazzled to the prestige of the Newtonian mechanics, were tempted to make ... a complete system of natural law seemed just round the corner. The laws in which 'God' expressed himself must form such a system."

(18) Odd Langholm, The Legacy of Scholasticism in Economic Thought: Antecedents of Choice and Power (Cambridge and New York: Cambridge University Press, 1998), 99.

(19) Langholm, The Legacy of Scholasticism, 85.

(20) Cf. F. Gomez Camacho, "El pensamiento economico de la Escolastica espanola a la Ilustracion escocesa," in El pensamiento economico en la Escuela de Salamanca, ed. F. Gomez Camacho and R. Robledo (Salamanca: Ediciones Universidad de Salamanca, 1998), 205-39; and F. Gomez Camacho, "Later Scholastics: Spanish Economic Thought in the XVIth and XVIIth Centuries," in Ancient and Medieval Economic Ideas and Concepts of Social Justice, ed. S. Todd Lowry and B. Gordon (Leiden: E. J. Brill, 1998), 503-62.

(21) Luis de Molina, De iustitia et iure (Cuenca, 1597), I, col. 15, C.

(22) Martin de Azpilcueta, Manual de confesores (Salamanca, 1556), cap. 27, no. 273ff.

(23) John Maynard Keynes, The Treatise on Probability (London: Macmillan, 1921, reprinted 1952), 340.

(24) Peter F. Drucker, "Toward the Next Economics," in The Crisis in Economic Theory, ed. D. Bell and I. Kristol (New York: Basic Books, 1981), 5.

(25) L. Vereecke, De Guillaume d'Ockham a Saint Alphonse de Liguori: etudes d'historie de la theologie morale moderne, 1300-1787 (Rome : Collegium St. Alfonsi de Urbe, 1986), 31.

(26) It is not unfounded that new scholarship, studying Keynes's philosophy in order to get a better understanding of his economics, makes a great deal of his distinction between the medieval scholastic terms causa essendi and causa cognoscendi. The cause of an event is not the cause of our knowledge of it.

(27) Molina, Treatise on Money, arg. 401, col. 986; arg. 410, col. 1036, B, C, D; Domingo de Soto, De iustitia et iure, libri decem (Salamanca, 1553), VI, q. 9; and Azpilcueta, Manual, cap. 17, no. 288.

(28) H. Reichenbach, The Philosophy of Space and Time (New York: Dover, 1958), [section] 4, 14-24.

(29) J. Hicks, Critical Essays in Monetary Theory (Oxford: Clarendon Press, 1965), 10, 13.

(30) John Maynard Keynes, A Treatise on Money (New York: AMS Press, 1976), chap. 1.

(31) Pierre Vilar pointed out how the accusation of "bullionism" that used to be levelled against the scholastic doctors was unfounded. Pierre Vilar, A History of Gold and Money, 1450-1920, trans. Judith White (Atlantic Highlands, N.J.: Humanities Press, 1976), 140. Also B. Gordon refutes Schumpeter's allegation that Aristotle was a bullionist, in Pre-Classical Economic Thought: From the Greeks to the Scottish Enlightenment, ed. S. Todd Lowry (Boston: Kluwer-Nijhoff Publishers, 1987), 226-30.

(32) Keynes, A Treatise on Money, 3-4.

(33) Mercado, Summa, I, 220.

(34) A. N. Whitehead, The Concept of Nature (Cambridge: Cambridge University Press, 1964), 120. (Italics mine)

(35) B. Russell, An Essay on the Foundations of Geometry (New York: Dover, 1956), 153. (Italics mine)

(36) Mercado, Summa, I, 220.

(37) B. W. Dempsey, "The Historical Emergence of Quantity Theory," Quarterly Journal of Economics 50 (November 1935): 175-76.

(38) Hicks, Causality in Economics.

(39) Molina, Treatise on Money, arg. 401, col. 988, B.

(40) Russell, Geometry, 153.

(41) Molina, Treatise on Money, arg. 400, col. 979, D.

(42) Molina, Treatise on Money, arg. 400, col. 980, C.

(43) Cf. ftn. 34, 35. Molina, De iustitia et iure, I, col. 15, C; and Azpilcueta, Manual, cap. 27, no. 273ff.

(44) Keynes, Treatise on Probability, 306-7.

(45) Cf. C. B. Boyer, The History of the Calculus and Its Conceptual Development (New York: Dover, 1959), chap. 4.

(46) A. Leijonhufvud, Macroeconomic Instability and Coordination: Selected Essays of Axel Leijonhufvud (Cheltenham, U.K.: Edward Elgar, 2000), 166-83.

(47) Juan de Mariana, Tratado y discurso sobre la moneda de vellon (Madrid: Instituto de Estudios Fiscales, 1987), 39. This Spanish translation was made by the author from his original Latin work, De monetae mutatione. A modern critical edition of the Latin original was prepared by Josef Falzberger and published recently under the same title (Heidelberg: Manutius, 1996). Moreover, an English translation of Falzberger's text was prepared by Patrick T. Brannan, S.J. and published in the Journal of Markets & Morality 5, no. 2 (Fall 2002) under the title, A Treatise on the Alteration of Money.

(48) Mariana, Tratado, 48.

(49) Mariana, Tratado, 53-55.

(50) Mariana, Tratado, 54.

(51) Mariana, Tratado, 54.

(52) Mariana, Tratado, 71.

(53) Molina, Treatise on Money, arg. 406, col. 1010, B, C, D.

(54) Vilar, A History of Gold and Money, 140. On the scholastic tradition in the Indies, see the work of Oreste Popescu, "Origenes Hispanoamericanos de la Teoria cuantitativa," in Aportaciones del Pensamiento Economico Iberoamericano, siglos XVI-XX (Madrid: Ediciones Cultura Hispanica del Instituto de Cooperacion Iberoamericana, 1986), 4-33.

(55) Cf. M. Grice-Hutchison, Economic Thought in Spain: Selected Essays of Marjorie Grice-Hutchinson, ed. Laurence S. Moss and Christopher K. Ryan (Aldershot, U.K.: Edward Elgar, 1993), 14-16.
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Title Annotation:Treatise on Money
Author:Camacho, Francisco Gomez
Publication:Journal of Markets & Morality
Geographic Code:1USA
Date:Mar 22, 2005
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